Agenda item

The report was introduced by the Leader of the Council who highlighted that Surrey County Council (SCC) had achieved an underspend of £6.7 million against forecasted expenditure for the 2016/17 financial year. In September 2016 the Finance Team had projected that SCC’s spending for the year would exceed the budget by £22.4 million but the Cabinet had worked with senior officers to identify a series of savings to bring SCC back within budget. Mr Hodge further stated that the Council had achieved £66.4 million of savings against a target of £82.9 million but highlighted that measures taken to bring SCC’s finance back into balance for the year had been a combination of genuine efficiencies coupled with one-off measures and spending delays. Attention was drawn to significant demand and cost pressures on Adult Social Care and Children’s Services which had culminated in a collective overspend of £25 million for 2016/17 across these two services which had disrupted the savings plan leading to a shortfall of £16 million against the Council’s target for the year. This meant that underlying pressures would persist in 2017/18 exerting a continued detrimental impact on the council’s medium term financial position which remained unsustainable. The Leader emphasised the importance of Members and officers continuing to identify and implement ways of addressing the ongoing issues affecting the council’s financial sustainability for 2017/18 and subsequent years.

Mr Hodge stated that the Council’s reserves of £65 million were at the minimum safe level and so it was appropriate to use the underspend from the 2016/17 budget to replenish its reserves in order to mitigate the risk of non-delivery against the Council’s savings target for 2017/18. He further advised that the report contained a combined total of £18.6 million in revenue and capital carry forward requests for 2017/18 and that it was necessary for the Cabinet to consider these carefully to ensure that there is sufficient capacity to meet these extra commitments in 2017/18 and to assure itself that the council overall has sufficient financial resources.

Cabinet Members were asked to comment on the financial position of their individual service areas and made the following statements:

·         Mr Mel Few expressed his gratitude to the Adult Social Care team for their commitment to delivering high quality services to residents despite increasing budgetary and demand pressures. He highlighted the significant amount of savings that Adult Social Care had made since 2013 despite increasing demand on services both in terms of the volume of residents entitled to social care and the level of support  which they required. Mr Few confirmed that he agreed with the carry forwards requested within the report.

·         The Cabinet Member for Schools, Skills and Education Achievement thanked the schools commissioning and admissions teams for the work they had done in creating a substantial number of additional school places over the past four years in order to meet rising demand. There had also been additional pressure on SCC’s special educational needs and disabilities (SEND) provision which had led to overspend of £500,000 against the agreed budget. Pressure on SEND provision had, however, largely been managed through the Council’s inclusivity strategy which aimed to keep children with SEND requirements in mainstream education. Mrs Kemeny advised that approval had been granted for two new special needs free schools which would enhance SEND provision in Surrey once completed.

·         Mrs Clare Curran emphasised that between planned savings targets and implementing the Improvement Plan, it had been a challenging year for Children’s Services. The Improvement Plan outlined a series of objectives designed to improve practice, strengthen relationships with partners and transform ways of working. The Cabinet Member advised that Children’s Services had overspent its budget for the year by £10.6 million which had occurred as a result of increased demand for specialised care packages, costs associated with caring for asylum seeking children and increased staff costs as a result of employing more social workers. She did, however, stress that Children’s Services had succeeded in delivering against its agreed programme of savings for 2016/17 but stated that making planned budget reductions for 2017/18 while continuing to implement the Improvement Plan would be extremely challenging.

·         Mr John Furey stated that the Highways and Transport Service had underspent by £1.3 million against its allocated budget for 2016/17 despite challenging circumstances. Attention was drawn to the success of Project Horizon which had improved a significant portion of Surrey’s road network. The Cabinet Member acknowledged that work was required to improve the state of the County’s pavements but stressed that the ability to do this was contingent on the Council’s future financial position due to the fact that improving highways infrastructure was not one of the Council’s statutory obligations. Mr Furey further emphasised the valuable partnership that SCC had with the Local Enterprise Partnerships in the region which had helped to secure significant additional capital for SCC to invest in improving Surrey’s highways network. The Leader of the Council stressed the importance of highlighting the volume of traffic on Surrey’s roads to Government in an effort to secure fairer funding.

·         The Cabinet Member for Environment and Planning advised that his portfolio had missed its savings target for the year by £800,000 which was largely due to a shortfall in anticipated savings arising from changes to Community Recycling Centres coupled with a delay in initiating the process of renegotiating contracts with suppliers. Mr Goodman highlighted that achieving the savings target for 2017/18 would be challenging but indicated that he was encouraged by potential opportunities for collaborating with the district and borough councils as well as possible savings that could be achieved through contract renegotiations with Suez.

·         Mr Richard Walsh stated that his portfolio covered a number of different service areas. He reported that Cultural Services had delivered an underspend of £500,000 for the year largely due to the efficiency of the Library service. The Cabinet Member further highlighted that Registration Services had also generated increased revenue during 2016/17.

·         The Cabinet Member for Wellbeing and Health drew attention to the work of the Public Health team who were using their ring-fenced budget to alleviate pressure on other Council services by helping to tackle spiralling demand.

·         The Deputy Leader advised that he had saved £800,000 from his agreed £1.7 million budget. 

·         Mrs Kay Hammond paid tribute to the work of Surrey Fire and Rescue Service (SFRS) who came in under budget for the year. She highlighted that SFRS had made a significant contribution to the overall savings achieved by the Council particularly through its emergency services collaboration partnership.

·         The Leader of the Council expressed his gratitude to the Chief Executive of the Council for his contribution to balancing SCC’s budget. He stressed that the work of the Chief Executive was an excellent advert for how effective collaborating with other public sector organisations could be.

RESOLVED:

That Cabinet noted the following;

1.         The council achieved -£6.7m overall underspend for 2016/17 (Annex 1, paragraph 1). 2016/17 is the seventh successive year, the council has achieved a small underspend or balanced outturn.

2.         Against this underspend, the council has made +£1.0m provision for the possible payment of legal costs and claims related to a number of contract compliance issues (Annex 1, paragraph 6). After making this provision, the council has -£5.7m available to transfer to reserves.

3.         The underspend includes £1.6m of carry forward requests for spending on planned service commitments that continue beyond 2016/17. If Cabinet approves the carry forward requests, the remaining underspend is -£4.1m. This is 0.2% of the council’s £1,686m full year gross expenditure budget.

4.         Services achieved £66.4m efficiencies and savings (Annex 1, paragraph 53) against the planned target of £82.9m.

5.         The council invested £257m through its capital programme in 2016/17, comprising £126m service capital programme and £131m long term investments (Annex 1, paragraph 64).

6.         The council’s year end earmarked reserves and balances, debt analysis and treasury management report (Annex 1, paragraphs App 8 to App 23).

That Cabinet approved the following;

7.         £5.7m transfer of remaining revenue underspend to the Budget Equalisation Reserve (Annex 1, paragraph 7).

8.         £1.6m revenue carry forward requests to be funded from within the £5.7m transferred to the Budget Equalisation Reserve (Annex 1, paragraph 3 and Annex 2).

9.         £3.5m carry forward overspend on services funded from dedicated schools grant (DSG) (Annex 1, paragraph 27).

10.      £5.8m increases in the capital budget for: third party contributions and grant allocation increases (£1.5m) and the delegated school funding drawdown (£4.3m) (Annex 1, paragraph 61).

11.      £17.0m capital programme reprofiling and carry forward requests (Annex 1, paragraphs 66 and 67 and Annex 2).

12.      Cabinet to approve services’ draw down of amounts carried forward, as and when they are needed, as part of the monthly budget monitoring process (Annex 1, paragraph 5 for revenue and paragraph 67 for capital).

13.      £1.8m transfer of Revolving Infrastructure and Investment Fund net income to the Budget Equalisation Reserve (Annex 1, paragraph 42).

14.      £2.9m transfer from the Vehicle Replacement Reserve to the Budget Equalisation Reserve.

Reasons for Decisions

To review and manage the budget outturn for the 2016/17 financial year in the context of a multi-year approach to financial management and to approve final carry forwards to enable essential on-going projects to continue.